General Motors has the ultimate sales strategy. It churns out millions of gas-guzzlers every year, two lanes wide and each one emblazoned with a proud American badge – a motor from motown. If you’re American, they reason, what could be nicer than buying an automobile handcrafted by your fellow countrymen?
Even when this sales pitch doesn’t bear fruit – as has been the case as thousands of Americans have opted for more reliable and cost-effective imports from Asia – they win. The US government announced last night that the American taxpayer is to take a majority shareholding in the stricken motor giant.
GM’s advertising campaign may as well state:
GM: Either buy our cars or buy us out.
In The Ascent of Money, Niall Ferguson redraws parallels between the financial services sector and Darwin’s theory of survival of the fittest. The biggest and best institutions swallow up smaller or struggling prey and get bigger and stronger by doing so. The notion of a bank or corporation being “too big to fail” is, according to Ferguson, a deeply unhealthy one.
If an institution needs propping up or risk toppling smaller prey, let it fall; the financial ecosystem will be neccessarily healthier in the long run as a consequence.
The American taxpayer has a right to be pretty annoyed by this effective nationalisation of a company so clunkingly out of date that it continues to make wheezing 4×4s for outback dwellers who haven’t heard of Japan let alone a ‘Civic hybrid’. More worrying should be the precedent set by a company who’s business plan is openly unsustainable being helped out by lender of last resort.
If dinosaurs still stalked the earth, we wouldn’t be here. The US administration needs to be bolder with its big guns and let them fall.
